Conditions of entering an industry

1t makes considerable difference whether newcomers can enter in industry at will or whether there are barriers to entry. The barriers are sometimes substantial. Where there are large economies of scale, it is not feasible to start small and grow; your costs wi11 be too high and you must be large from the beginning. This means raising a large amount of capital, which for a new and untried producer may be expensive or even impossible. Moreover, if the product is differentiated, you will have to spend a lot on advertising to force your way into the market; and if you fail, you will have nothing to show for this investment. So, in some branches of industry, the costs and risks of setting up in business are so great that new producers are effectively barred.

Definition of Market Structures (from the seller’s side):

Monopoly: one seller of a product.

Oligopoly: few sellers of a (standardized or differentiated) product.

Monopolistic competition: many sellers of a differentiated product.

Pure competition: many sellers of a standardized product.

This classification of market forms correspond in some measure to major sectors of the economy. Thus monopoly is found mainly in the public utility industries, oligopoly is characteristic of manufacturing, monopoli­stic competition prevails in retailing and pure competition is typical of agriculture.

Task 1. Find the correct translation of the following words and word combinations:

A. 1. partial equilibrium analysis 2. general equilibrium analysis 3. explicit account 4. to offset costs 5. to reduce costs 6. an increase in demand 7. tend to raise the price 8. feedback effect 9. appropriate adjustments 10. upswing 11. to overlook 12. untried producer 13. pure competition 14. to prevail

В. 1. соответствующее регулирование 2. преобладать 3. анализ частичного равновесия 4. чистая конкуренция 5. уменьшить затраты 6. стремится увеличить цену 7. анализ общего равновесия 8. эффект обратной связи 9. пропустить 10. увеличение спроса 11. компенсировать убытки 12. точный отчет 13. подниматься.

Task 2. Ask each other questions on the contents of the text and answer them.

MARKETS AND PRICES

TEXT IV

Product Development and Planning

The number of new products coming into the world market every year is overwhelming. The major part of these products is not new, but adaptati­ons. It means that these products are not really new, they are existing items, to which a modification has been made. Only few products are really ori­ginal or innovations. A great number of innovations and adaptations are designed, produced and marketed by small businesses. Very often a new product is formed on the basis of a new business. Sometimes there is a patent to make the business more successful. But it happens very often market research hasn’t been done carefully. Even in case larger scale producers do more research and testing there is no sure success. A pro­mising new product may be also robbed of success by unreasonable prices, inadequate promotion and poor selling methods. Generally less than one-fifth of all new products turns out to be profitable.